UK diesel price cost surge likely to be passed onto pubs

17-May-2022 - Last updated on 17-May-2022 at 10:02 GMT

Cost of doing business crisis: diesel prices reach a record high amid rising costs across the board for hospitality sector (Credit: Getty/Peter Cade)

UK diesel prices have risen to a record high of more than £1.80 a litre as efforts to move away from importing Russian diesel led to a tightening of supply, according to the RAC.

This follows the previous record high for diesel of £1.79 in March, following Russia’s invasion of Ukraine, and has left operators questioning the impact this could have on existing supply issues and food prices.

The Bath Pub Company managing director Joe Cussens said: “The main impact will be the knock-on effect on prices charged by our suppliers.

“If the cost of production and transport of their goods goes up due to higher diesel costs, then it’s likely they’ll pass this on to us. We’ve increased our prices already and will no doubt do so again in the future.”

Meaningful lifeline

The roadside assistance company said while wholesale gas prices have eased over the past few days this was likely to be temporary, especially if the EU agrees to ban imports of Russian oil.

According to the RAC, had the Chancellor reduced VAT to 15% in his Spring Statement instead of cutting fuel duty by 5p, drivers of diesel vehicles, and therefore hospitality businesses, would be around 2p a litre better of as currently, drivers are paying 27p VAT on petrol and 29p on diesel, the same as prior to the statement.

Cussens added: “A cut in VAT would provide a real and meaningful lifeline. A reduction in fuel duty is just nibbling around the edges of the problem.

“A VAT cut would increase margins and give pubs a chance to rebuild their finances, without something like this, I fear many pubs will go to the wall.”

Furthermore, the RAC also reported the average price of petrol has risen almost 3p a litre since the start of the month to 166.65p, less than a penny away from the all-time high of 167.30p in March.

Business crisis

This comes on top of rising costs across the board for the sector from business rates to food and energy prices.

British Beer & Pub Association (BBPA) chief executive Emma McClarkin said: “With prices rising on everything from energy to food, the cost of diesel increasing is set to add further pressure to pub and brewing businesses across the country.

“As an industry we rely on the delivery of ingredients and goods to run a smooth operation and rising fuel costs have the potential to disrupt our supply chains and cause hesitation amongst customers who feel they can’t afford the cost of the journey to the pub.

“Increasingly it is clear we are experiencing a cost of doing business crisis and we need the Government to act before it’s too late.”